Showing papers in "Journal of Economic Integration in 1995"
TL;DR: In this paper, the main arguments for destination versus origin-based commodity taxation in the European Community's Internal Market are discussed, and the administrative and political implications of a switch to the origin principle are discussed.
Abstract: The paper discusses the main arguments for destination- versus origin-based commodity taxation in the European Community’s Internal Market. Destination-based solutions distort commodity trade in the Community because cross-border purchases by final consumers can only be taxed in the origin country. On the other hand, an origin-based general consumption tax is neutral in a European context and it can be combined with destination-based taxation in third countries in a non-distortionary way. Furthermore, it is shown that the introduction of capital mobility does not affect the neutrality of an origin-based consumption tax. Finally, the paper addresses the administrative and political implications of a switch to the origin principle in the European Community.
34 citations
TL;DR: In this article, the sensitivity of the comparative static elasticities of a general equilibrium model of production to factor intensity and factor substitution was examined, and it was shown that factor intensity influences the comparative statics more than factor substitution.
Abstract: This paper examines the sensitivity of the comparative static elasticities of a general equilibrium model of production to factor intensity and factor substitution. A model of the US economy is specified with three factors and two goods. Changing factor endowments have consistently inelastic effects on factor prices. Prices of goods, however, have elastic effects on factor prices, and factor endowments have elastic effects on outputs. Factor intensity influences the comparative statics more than factor substitution. Under a move toward free trade characterized by a falling price of manufactures relative to services, the wage of unskilled labor falls while the wage of skilled labor and the price of capital rise.
24 citations
TL;DR: In this paper, a new policy scheme that embodies the incentive of production is proposed, which ties positively the government purchase from each of the domestic firms to its sales to consumers, and has the effects of increasing domestic output and reducing imports.
Abstract: Due to the inefficacy of current government procurement policy (Baldwin [1970, 1984], Baldwin and Richardson [1971], and Miyagiwa [1991]), a new policy scheme that embodies the incentive of production is proposed in this paper The policy, which ties positively the government purchase from each of the domestic firms to its sales to consumers, is found to have the effects of increasing domestic output and reducing imports Moreover, the optimal policy is such that it induces the domestic firms to produce at the socially optimal level
21 citations
TL;DR: In this paper, the authors explore the relationship between regional and multilateral agree-ments to liberalize trade in services, following a conceptual discussion of the political economy of regional as opposed to multilateral negotiations, existing data on trade and investment flows are analyzed with a view to gaining some insight into the likely interest group preferences regarding alternative institutional arrange ments.
Abstract: This paper explores the relationship between regional and multilateral agree ments to liberalize trade in services. Following a conceptual discussion of the polit ical economy of regional as opposed to multilateral negotiations, existing data on trade and investment flows are analyzed with a view to gaining some insight into the likely interest group preferences regarding alternative institutional arrange ments to liberalize trade in services. Conceptual considerations and available data suggest a preference for regional liberalization. But available data and a comparison of the content of the major existing agreements also suggests that regional and multilateral approaches are more likely to be considered by service industries and regulators to be complements than substitutes. (JELF13)
20 citations
TL;DR: In this article, the authors present some empirical evidence, based on testing real interest pari ty, supporting the proposition that the implementation of CER and the deregulation of financial markets have contributed to achieving a higher degree of integration between goods and financial markets in Australia and New Zealand.
Abstract: This paper presents some empirical evidence, based on testing real interest pari ty, supporting the proposition that the implementation ofCER and the deregulation of financial markets have contributed to achieving a higher degree of integration between goods and financial markets in Australia and New Zealand. The evidence is derived from a finding of real interest linkages in the post-CER period. Although perfect integration, as implied by a strict equality of real interest rates, is far from being the case, there is some indication that CER and the liberalization of financial markets have enhanced the move in this direction.
15 citations
TL;DR: In this paper, the authors used a simple general equilibrium model to isolate the transfer effects resulting from protection in Malaysia and used the concept of true protection to con struct a transfer matrix which showed how income is transferred among various sectors of the economy.
Abstract: This paper uses a simple general equilibrium model to isolate the transfer effects resulting from protection in Malaysia. Ignoring the deadweight losses associated with protection, the model uses the concept of true protection to con struct a transfer matrix which shows how income is transferred among various sectors of the economy. The evidence suggests that it is only the exporters who pay for protection. The cost to Malaysian exporters was about 2.56 percent of GDP in 1989.
8 citations
7 citations
TL;DR: In this paper, the welfare implications of trade liberalization on a small open economy that imports as well as exports agricultural products are discussed. But, depending upon the pattern of agricultural trade as a whole, the volume of trade and Price sensitivity of import demand, the welfare implica tions of agriculturaltrade liberalization can go either way.
Abstract: The recently concluded multilateral trade agreement, GATT, proposes to reduce export subsidies on agricultural items. This paper discusses, in a gener al equilibrium framework, the welfare implications of such a move on a small open economy that imports as well as exports agricultural products. The paper shows that, depending upon the pattern of agricultural trade as a whole, the volume of trade and Price sensitivity of import demand, the welfare implica tions of agricultural trade liberalization can go either way.
5 citations
TL;DR: In this article, the authors present an empirical analysis of the factor price equalization (FPE) for 16 OECD countries and show that the disper sion of wages in the OECD countries follows a non-stationary process.
Abstract: This paper presents an empirical analysis of the factor price equalization the orem (FPE) for 16 OECD countries. The paper demonstrates that the disper sion of wages in the OECD countries follows a non-stationary process. Nonethe less, the wages tend to converge as trade expands. The results also indicate that wage dispersion in the short-run responds in an asymmetric manner to trade expansion depending upon the source of this expansion. In the long-run, esti mates show that increases in both exports and imports lead to wage convergence among the OECD countries. This result supports the FPE theorem. [JEL.: F00,F1, F15J30, COO, C22]
3 citations
2 citations
TL;DR: In this paper, the international effects of source-based capital income taxation in a large economy were analyzed in the context of a two country overlapping generations model in continuous time, and the implications of such taxation for the world interest rate and for investment, consumption, and external balances at home and abroad.
Abstract: The paper is concerned with international effects of source-based capital income taxation in a large economy. We derive, within the context of a two country overlapping generations model in continuous time, the implications of such taxation for the world interest rate and for investment, consumption, sav ing and external balances at home and abroad. Furthermore, we argue that higher source-based taxes will hurt foreigners alive at the time of the policy change, whereas future citizens abroad stand to benefit. Finally, the effects of sourceand residence-based taxes are compared.
TL;DR: This paper showed that there is an inherent tendency, due solely to the difference in monetary adjustment mechanisms across alternative exchange rate regimes, for real exchange rates to exhibit greater variability under flexible exchange rates and this tendency turns out to be compatible with the observed positive correlation between real and nominal exchange rates.
Abstract: It is well established now that the (nominal) exchange rate regime has important implications for the behavior of real exchange rates. Two key stylized facts in this regard are that real exchange rate variability is greater under flexible exchange rates than under fixed exchange rates and that real and nominal exchange rate movements are positively related under flexible exchange rates. One class of models that are consistent with these observations are sticky price models. This paper constructs an equilibrium model of real and nominal exchange rate determination that is capable of explaining these observed facts without resorting to differences in other policies across regimes. The paper thus shows that there is an inherent tendency, due solely to the difference in monetary adjustment mechanisms across alternative exchange rate regimes, for real exchange rates to exhibit greater variability under flexible exchange rates and this tendency turns out to be compatible with the observed positive correlation between real and nominal exchange rates. The model relies on the inflation tax mechanism and the impact of temporary, country-specific shocks to generate these results.
TL;DR: In this paper, the effect of international competition on union wages, union/non-union wage differences, and the real earnings of each type of labor was examined; and the effects of unionization on the distribution of income.
Abstract: This paper examines (i) the effect of international competition on union wages, union/non-union wage differences, and the real earnings of each type of labor; and (ii) the effect of unionization on the distribution of income. We also consider the effect of tariff protection on each type of labor. It is shown that union and non-union workers may be affected differently by trade and interna tional competition, and intuition based on traditional trade theory is some times contradicted. If tariff protection helps workers (through higher real wages) in the non-unionized sector, it does not follow that the same holds for union workers. The elasticity of factor substitution turns out to be crucial in characterizing how union wages behave.
TL;DR: In this paper, the welfare effects of an inflow of foreign capital when the government finances the provision of the public input either (i) by taxing the return to foreign capital, or (ii) by imposing a tariff on the imported good was examined.
Abstract: This paper develops a general equilibrium trade model of a less developed country, facing imperfect international capital mobility, and producing a pub lic input. Within this framework, the paper examines the welfare effects of an inflow of foreign capital when the government finances the provision of the public input either (i) by taxing the return to foreign capital, or (ii) by impos ing a tariff on the imported good. Using the gross domestic product (GDP) function with public input production, the paper shows that (i) in the presence of a tariff, the inflow of foreign capital may increase the country's welfare, even if the imported good, is capital intensive, and (ii) in the presence of capital taxes, the inflow of foreign capital may decrease the country's welfare. The paper examines also within the two-good, two-factor model the effect of a capi tal inflow on factors rewards. (JEL: F13, F20)
TL;DR: In this article, the effects of expansionary fiscal policy in a general equi librium model of a small open economy with a recursive time preference struc ture in which the intertemporal optimizing behavior of infinitely-lived agents endogenously determines employment, investment, and the current account are studied.
Abstract: The paper studies the effects of expansionary fiscal policy in a general equi librium model of a small open economy with a recursive time preference struc ture in which the intertemporal optimizing behavior of infinitely-lived agents endogenously determines employment, investment, and the current account. It is shown that the adjustment to the steady state may be cyclical and the long run government spending multiplier may exceed one.
TL;DR: In this paper, the authors examine whether market imperfections alone can fail flexible exchange rates to insulate aggregate output from foreign monetary shocks, and they find that the possibility of insulation hinges on whether monopolists can freely adjust their individual prices to optimum.
Abstract: In a two-country model of monopolistic competition where PPP holds at aggre gate price levels, this paper examines whether market imperfections alone can fail flexible exchange rates to insulate aggregate output from foreign monetary shocks. It finds that the possibility of insulation hinges on whether monopolists can freely adjust their individual prices to optimum If monopolists keep rigid their individual prices, these shocks will destabilize domestic aggregate output; and the greater the degree of monopoly power, the larger the output fluctuations. The study conveys an implication for recent menu-costs models that price adjust ment costs not only can cause price stickiness and non-neutrality of money, as they have shown but can fail flexible rate to achieve insulation as well. The fundamental argument for flexible exchange rates is that they would allow countries autonomy with respect to their use of monetary, fiscal and other policy instruments, consistent with the maintenance of whatever degree of freedom in international transactions they choose to allow their citizens, by automatically ensuring the preservation of external equilibrium. H.G.Johnson [1972, pp. 199] * Correspondence Address: Department of Economics, University of North Carolina, Charlotte, NC 28223, U.S.A.; The author would like to thank two anonymous ref erees for valuable comments. ©1995 Institute for International Economics, Sejong Institution. All rights reserved. This content downloaded from 157.55.39.231 on Wed, 05 Oct 2016 04:37:49 UTC All use subject to http://about.jstor.org/terms
TL;DR: In this paper, welfare comparisons of two states with commodities trade and factor trade are made in a general many commodity, many factor and two country frame work and sufficient conditions for various trade policies such as commodities trade with factor trade, commodities trade without factor trade and autarky to be better than the others are derived.
Abstract: Welfare comparisons of two states with commodities trade and factor trade are made in a general many commodity, many factor and two country frame work. As a corollary sufficient conditions for various trade policies such as commodities trade with factor trade, commodities trade without factor trade and autarky to be better than the others are derived.
TL;DR: In this article, the authors used a general model of international trade to analyze the long run factors: technological change, changes in the endowment of primary factors and market size, which determine the real exchange rate.
Abstract: This paper uses a general model of international trade to analyze the long run factors: technological change, changes in the endowment of primary fac tors and market size, which determine the real exchange rate. It is shown that the real exchange rate is positively correlated with economic size as well as technological progress in traded sectors. By contrast, the relationship between endowments of primary factors such as land and mineral deposits and the real exchange rate is ambiguous.
TL;DR: In this article, the authors examined the relationship between changes in commodity prices and changes in factor prices when individuals can diversify their factor owner ship portfolios and found that in a closed economy, it is always possible to find a distribution of factor ownership which makes everyone indifferent to any small, exogenous price change and which satisfies the conditions for full employment of each fac tor.
Abstract: This paper examines the relationship between changes in commodity prices and changes in factor prices when individuals can diversify their factor owner ship portfolios. In a closed economy, it is always possible to find a distribution of factor ownership which makes everyone indifferent to any small, exogenous price change and which satisfies the conditions for full employment of each fac tor. Such a distribution of factor ownership would dissipate interest in any price change since it would leave everyone's real income unchanged. In an open econ omy, it may not be possible to find such a distribution of factor ownership.